Question

Carl purchased a $385 stereo at Worst Buy. He paid $29 at the time of purchase and agreed to pay the balance in 12 equal monthly payments. The finance charge was 13% simple interest. What was the amount of each payment?

Answer 1

each payment would be $32.52

Explanation:

Cost of stereo $385

Initial payment $29

Therefore amount financed = $385 - $29 = $356

Interest rate = 13%

Interest charges for 1 year = $356 * 13% = $46.28

Total amount to be paid in instalments = $356 + $46.28 = $402.28

Amount of each payment = $402.28 / 12 = 33.52